Annual Report 2011 - Mandarin Oriental Hotel Group

6 Mandarin Oriental International Limited
Chairman’s Statement
Overview
Increased demand throughout 2011 led to improved performances in most of the Group’s markets, which
helped offset the impact on earnings of reduced occupancy in Tokyo following the earthquake and tsunami
and the pre-opening costs in Paris. Most Group hotels maintained or enhanced their competitive positions,
and the strength of the brand was further demonstrated by an increase in the number of leading awards received.
Performance
Underlying earnings before interest, tax, depreciation and amortization (‘EBITDA’) for 2011 were US$163 million,
an increase of US$27 million from 2010. The 2011 result includes US$16 million of branding fees received
following the completion of The Residences at Mandarin Oriental, London offset in part by US$13 million of
pre-opening expenses in Paris.
Underlying profit was up 33% at US$59 million in 2011, and underlying earnings per share were 32% higher
at US¢5.92.
Profit attributable to shareholders was US$67 million. This included US$8 million of net non-trading profit,
with the principal item being a gain of some US$10 million representing the value of a long-term leasehold interest
in part of The Residences at Mandarin Oriental, London which was granted by the developer to the Group at no cost.
There were no non-trading items in 2010.
The Group’s balance sheet remains strong. After taking into account an independent valuation of the Group’s hotel
properties, the net asset value per share was US$2.70 at 31st December 2011, compared with US$2.33 at the end
of 2010.
The Directors recommend a final dividend of US¢4.00 per share. This, together with the interim dividend of
US¢2.00 per share, will make a total annual dividend of US¢6.00 per share, an increase of US¢1.00 per share
from 2010.
Group review
Profitability improved across most of Mandarin Oriental’s portfolio, particularly in Asia and Europe.
In Hong Kong, robust demand at the Group’s two wholly-owned hotels led to improved occupancy, rates and
profitability. Revenue per available room (‘RevPAR’) increased at Mandarin Oriental, Hong Kong by 14% and
at The Excelsior by 18%. In Tokyo, occupancy fell to 50% from 64% in 2010, although some improvement
was seen towards the end of the year. Singapore continued to benefit from a growing number of visitors to the city,
but the performance in Bangkok was adversely affected in the last quarter of the year by the floods in Thailand.
In Europe, most of the Group’s hotels benefited from an increase in demand, with particularly strong performances
in London and Munich. Mandarin Oriental, Paris opened in June to considerable acclaim. The 138-room property
is positioned as one of the best hotels in the city and has been well received.
In The Americas, business levels improved across the portfolio, although the rate of RevPAR growth was lower than
in the Group’s other regions.